British reports suggest that the main stumbling block is that Toronto wants to sell the 32-year-old England star rather than offer him on loan during the January transfer window. That's because Toronto wants to recover some of its hefty cost in signing Defoe.
Defoe's future in Major League Soccer has been up in the air since Toronto turned down a club-record transfer bid at the end of the summer transfer window.
The Guardian says Defoe is set to join goal-starved Leicester. The Daily Telegraph, meanwhile, says Liverpool has been sounded out about taking Defoe. The Reds have had to do without the injured Daniel Sturridge and Mario Balotelli has not lived up to expectations.
Like QPR boss Harry Redknapp, Hull City manager Steve Bruce is interested in Defoe but says the price tag may be too high.